How to Make a Buck

Not every man can turn an $85,000 investment into a profit of $1,005,000 in two short years. Last week Robert Hirsch, a Bridgeport, Conn, insurance man, turned the trick with the help of some Fair Deal bumbling in Washington.

In 1950, Hirsch and four associates signed a contract with the Government's General Services Administration to buy a surplus aircraft plant in Stratford, Conn, that had stood empty since Chance Vought moved to Texas in 1949. After the Korean war began, GSA checked twice with the Munitions Board to make sure the plant would not be needed. The board assured GSA that it did not want the plant; it would be useful only in the event of total mobilization. The price was $2,010,000, and Hirsch and friends paid $85,000 down. When Hirsch heard that Avco Manufacturing Corp. was looking for a plant to make plane engines for the Air Force, he signed up the company as a tenant at $725,000 a year.

But when Hirsch and his friends offered their second payment of $320,000, they got a surprise: GSA refused to accept the cash. It announced, instead, that the Government needed the plant after all, and was taking it back through condemnation. And why did the Government need it? For Avco's new engine production, of course. The Air Force had suddenly discovered that altering and equipping the plant at Government expense for Avco would run into millions; it didn't like the idea that when Avco's lease ran out, the plant would revert to Hirsch, improvements and all. Hirsch filed suit to protect his property.

In Hartford, Hirsch won the first round of what is sure to be a long legal battle. Federal Judge J. Joseph Smith agreed with a court-appointed committee that in reclaiming the plant, the Government must pay Hirsch & associates $3,100,000. The court ruled that the value of the plant had increased one-third the moment Hirsch signed up a tenant. Added Judge Smith pointedly: "Some provision for renegotiation of such [purchase] contracts ... to recapture large, short-term speculative profits would be desirable ..."

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